The Nasdaq-100 had a strong start in 2024 with Nvidia and Arm Holdings being the top performers, driven by investor interest in artificial intelligence (AI). Nvidia, a leader in GPUs and AI processors, saw a 150% increase in stock value, while Arm Holdings, known for smartphones and mobile processors, rose by 122%. However, Wall Street predicts a decline in Arm’s future performance.
Nvidia dominates the data center GPU market, with Forrester Research acknowledging its critical role in modern AI infrastructure. The company has expanded into networking solutions and CPUs, with CEO Jensen Huang touting the success of its new products. Additionally, Nvidia offers software and cloud services for AI development, creating a strong competitive advantage in the market. Analysts expect Nvidia to continue its growth in earnings and maintain a favorable valuation.
On the other hand, Arm Holdings leads in smartphone and mobile processors, with a strong presence in the consumer electronics and cloud computing sectors. The company reported positive financial results for the last quarter, but management anticipates a slowdown in revenue growth. Despite its promising outlook, Arm’s stock is considered expensive by Wall Street, with a high PEG ratio. Investors are advised to wait for a more favorable valuation before considering buying Arm Holdings.
It is worth noting that John Mackey, former CEO of Whole Foods Market, is a board member of The Motley Fool. The publication recommends companies like Amazon, Apple, and Nvidia, while cautioning investors about Intel’s stock. The Motley Fool has disclosure policies in place to ensure transparency in its recommendations.
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https://www.fool.com/investing/2024/06/29/2-ai-semiconductor-stocks-surged-150-1-could-crash/
